Economics, 3rd Edition

model of aggregate demand and aggregate supply 

 

the model that most economists use to explain short-run 

fluctuations in economic activity around its long-run trend

monetary neutrality 

the proposition that changes in the 

money supply do not affect real variables

monetary policy 

the set of actions taken by the central bank in 

order to affect the money supply

money 

the set of assets in an economy that people regularly use 

to buy goods and services from other people

money market 

the market in which the commercial banks lend 

money to one another on a short-term basis